Latest MHEM Forecast Points to Solid Growth through 2015

The economic sequester seems to be loosening its grip for Material Handling Equipment Manufacturers.

Edited by Tom Andel | Sep 05, 2013

The fundamentals for solid growth in the U.S. economy are in place for 2014 and 2015, according to analysts at IHS Global Insight. The second quarter’s 1.7% real GDP growth represents the third consecutive quarter of growth below 2.0%, although a gradual acceleration occurred over these three quarters—a trend that IHS sees continuing into the second half of 2013 and into 2014.

• The most significant negative element of the second quarter was a 0.8-percentage-point drag from net exports. The decline there can be traced to an increase in imports of automobiles and consumer goods. This will be something to keep an eye on as

economic growth picks up momentum, the analysts state.

• Federal government spending, dominated in recent months by the sequester, subtracted only 0.1 percentage point from GDP growth—a marked improvement from the 1.2-percentage-point and 0.7-percentage-point negatives in the prior two quarters.

• Consumer and business spending grew at moderate and sustainable rates in the second quarter. The data from these sectors were positive in that every major area contributed to economic growth. Additionally, there is very little evidence of any inventory overhang that could slow growth in the second half of the year.

Supported by this assessment, the latest Material Handling Equipment Manufacturing (MHEM) forecast of the Material Handling Industry (MHI) calls for solid growth well into next year.

The forecast’s author, Hal Vandiver, MHI's executive consultant, says these results will set the stage for continued expansion into 2015. He cites the following highlights of the MHEM forecast:

• MHEM New Orders grew 5.5% (revised) in 2012.

The outlook for 2013 is for growth of 7.0% and 11.0% or better for 2014; both are upward revisions.

• MHEM Shipments grew 6.8% (revised) in 2012. Shipments will grow about 5.0% in 2013, and 10.8% in 2014; both are upward revisions.

• MHEM Domestic Demand grew 7.9% (revised) in 2012. Domestic Demand (Shipments plus Imports less Exports) will mirror Shipment growth in 2013 at 5.2% and just over 11.0% in 2014; both are upward revisions.

• MHEM Trade growth slowed by more than 50.0% in 2012, reflecting reduced U.S. demand and serious problems in foreign markets. Import growth in 2012 was 17.9%, down from 37.7% in 2011. Export growth was 11.2% in 2012, down from 26.2% in 2011.

MHEM Imports and Exports are expected to slow dramatically in 2013 and rebound modestly beginning mid-2014; no change from the prior forecast.